Financial Survey: PPL Corporation (PPL) vs. CenterPoint Energy (CNP)

PPL Corporation (NYSE: PPL) and CenterPoint Energy (NYSE:CNP) are both large-cap utilities companies, but which is the better investment? We will contrast the two businesses based on the strength of their earnings, valuation, dividends, profitability, risk, analyst recommendations and institutional ownership.

Analyst Ratings

This is a summary of recent ratings and target prices for PPL Corporation and CenterPoint Energy, as reported by MarketBeat.

Sell Ratings Hold Ratings Buy Ratings Strong Buy Ratings Rating Score
PPL Corporation 0 5 3 0 2.38
CenterPoint Energy 0 7 1 0 2.13

PPL Corporation currently has a consensus price target of $38.36, indicating a potential downside of 1.45%. CenterPoint Energy has a consensus price target of $27.57, indicating a potential downside of 4.96%. Given PPL Corporation’s stronger consensus rating and higher possible upside, equities analysts plainly believe PPL Corporation is more favorable than CenterPoint Energy.

Profitability

This table compares PPL Corporation and CenterPoint Energy’s net margins, return on equity and return on assets.

Net Margins Return on Equity Return on Assets
PPL Corporation 22.08% 15.96% 4.16%
CenterPoint Energy 6.86% 16.45% 2.65%

Insider and Institutional Ownership

71.0% of PPL Corporation shares are held by institutional investors. Comparatively, 76.8% of CenterPoint Energy shares are held by institutional investors. 0.4% of PPL Corporation shares are held by company insiders. Comparatively, 0.2% of CenterPoint Energy shares are held by company insiders. Strong institutional ownership is an indication that large money managers, endowments and hedge funds believe a stock will outperform the market over the long term.

Dividends

PPL Corporation pays an annual dividend of $1.58 per share and has a dividend yield of 4.1%. CenterPoint Energy pays an annual dividend of $1.07 per share and has a dividend yield of 3.7%. PPL Corporation pays out 66.1% of its earnings in the form of a dividend. CenterPoint Energy pays out 77.0% of its earnings in the form of a dividend, suggesting it may not have sufficient earnings to cover its dividend payment in the future. PPL Corporation has increased its dividend for 11 consecutive years and CenterPoint Energy has increased its dividend for 5 consecutive years. PPL Corporation is clearly the better dividend stock, given its higher yield and longer track record of dividend growth.

Earnings and Valuation

This table compares PPL Corporation and CenterPoint Energy’s top-line revenue, earnings per share and valuation.

Gross Revenue Price/Sales Ratio EBITDA Earnings Per Share Price/Earnings Ratio
PPL Corporation $7.40 billion 3.61 $4.04 billion $2.39 16.28
CenterPoint Energy $8.85 billion 1.41 $2.08 billion $1.39 20.87

PPL Corporation has higher revenue, but lower earnings than CenterPoint Energy. PPL Corporation is trading at a lower price-to-earnings ratio than CenterPoint Energy, indicating that it is currently the more affordable of the two stocks.

Risk and Volatility

PPL Corporation has a beta of 0.49, indicating that its share price is 51% less volatile than the S&P 500. Comparatively, CenterPoint Energy has a beta of 0.64, indicating that its share price is 36% less volatile than the S&P 500.

Summary

PPL Corporation beats CenterPoint Energy on 12 of the 17 factors compared between the two stocks.

About PPL Corporation

PPL Corporation (PPL) is a utility holding company. Through its subsidiaries, PPL delivers electricity to customers in the United Kingdom, Pennsylvania, Kentucky, Virginia and Tennessee; delivers natural gas to customers in Kentucky, and generates electricity from power plants in Kentucky. PPL operates through U.K. Regulated Segment, Kentucky Regulated Segment and Pennsylvania Regulated Segment. The U.K. Regulated Segment consists of PPL Global, which includes PPL WPD Limited’s (WPD) regulated electricity distribution operations, the results of hedging the translation of WPD’s earnings from British pound sterling into United States dollars, and certain costs, such as the United States income taxes, administrative costs and allocated financing costs. Kentucky Regulated segment consists of the operations of Louisville Gas and Electric Company (LG&E) and KU Energy LLC (LKE). The Pennsylvania Regulated segment consists of PPL Electric Utilities Corporation (PPL Electric).

About CenterPoint Energy

CenterPoint Energy, Inc. is a public utility holding company. The Company, through its subsidiaries, owns and operates electric transmission and distribution facilities, and natural gas distribution facilities. The Electric Transmission & Distribution segment provides electric transmission and distribution services to retail electric providers. Its Natural Gas Distribution segment offers intrastate natural gas sales to and natural gas transportation and distribution for residential, commercial and industrial customers. Its Energy Services segment includes non-rate regulated gas sales and transportation and storage services for commercial and industrial customers. Its Midstream Investments segment includes equity investment in Enable that owns, operates and develops natural gas and crude oil assets. Its Other Operations segment includes office buildings and other real estate used in its business operations and other corporate operations.

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